In Louisville, Dollar Store Saturation Mirrors National Picture

Amina Elahi

8 months ago

Dollar General stores are growing across the United States in lower-income areas where budgets are tight and shopping options are limited. Around Louisville, the company seems to target similarly cost-conscious families.

“The economy is continuing to create more of our core customer,” Dollar General CEO Todd Vasos recently told the Wall Street Journal. The newspaper pegged Dollar General’s “target shoppers” as those who have household incomes of $40,000 or less.

The chain is finding profits in areas that can’t necessarily support other retailers, such as Walmart, Bloomberg Businessweek reported in October. Across the country — and in Kentucky — that sometimes means opening stores in rural areas that are not recovering economically.

There is, for example, a location in Brooksville, Ky., a small town in Northern Kentucky with a population of 642. There, the median household income is $21,786, according to the U.S. Census Bureau. Estimated unemployment was 9.9 percent among those 16 years and older in 2015, up from 9.3 percent in 2010. The closest Walmart is more than 15 miles away.

But while rural areas may be proving popular for Dollar General, its locations are concentrated in areas of cities such as Louisville and Cincinnati as well.

‘Low-income exploitation’

Chickasaw Neighborhood Federation president Donovan Taylor said he started seeing an influx of dollar stores in West Louisville about a decade ago.

“I think what these dollar stores realized that there was an open market in these neighborhoods,” Taylor said. “They saw how these corner stores were exploiting and profiting in these neighborhoods and they just thought, ‘How about corporate America join in this low-income exploitation?’”

In 2012, Dollar General said it planned to build more in urban areas, though ultimately successful rural locations retained its focus, the Wall Street Journal reported. Since then, Dollar General has opened seven stores in Jefferson County, spokeswoman Angela Petkovic said in an email. That translates to an increase of 32 percent.

Now, there are 33 Dollar General stores in Louisville, according to the company’s website. There are no more planned here for now, Petkovic said. The company — which started in 1955 in Springfield, about an hour and fifteen minutes southeast of Louisville by car — had 14,000 stores in 44 states as of Aug. 2017, she said. It has about 494 stores in Kentucky, with approximately 10 more under construction.

Petkovic said Dollar General places stores where it thinks it can provide customers a convenient shopping option.

“We know convenience is a major factor in our customers’ shopping decisions as we generally serve customers within a three to five mile radius, or 10 minute drive,” she wrote in an email to WFPL. “We also take demographic trends, competitive factors, traffic patterns and community concerns into consideration.”

Convenience is one of the reasons Taylor shops at dollar stores about twice a month, even though he thinks the items are low-quality, especially the toys. He said the stores offer some positives, such as being accessible to folks without many transportation options, employing locals and providing some competition to pricey corner stores.

But Taylor wishes there weren’t so many of them. He said he believes the “over-saturation” of dollar stores in West Louisville discourages other businesses from entering the neighborhood.

“When you have a certain number of these dollar stores without the diversity of other retail stores, it can put a certain impression on the neighborhood, that this neighborhood is so desperate that they can only support such stores,” Taylor said.

Petkovic said Dollar General stands behind the quality of its merchandise.

Across Louisville, the median household income in 2015 was $45,762, per the Census Bureau. That’s just north of Dollar General’s sweet spot.

Clusters Of Dollar Stores

Nearly a third of the Louisville-area stores are clustered on the west and south sides, in neighborhoods such as California, Parkland and Shively. Those neighborhoods had median household incomes of $16,992, $13.032 and $28,438, according to a WNYC presentation of Census Bureau data from 2008 to 2012.

Another third of them are in spread out across southeastern neighborhoods such as Highview ($52,130 median household income), Lynnview ($36,607) and Jeffersontown ($49,375).

There are no Dollar Generals in neighborhoods areas such as the Highlands, Crescent Hill and St. Matthews, though there’s a Dollar Tree in St. Matthews and a Family Dollar in the Highlands. Those two chains merged in 2015 and are Dollar General’s top competition. Median household income in those neighborhoods in 2015: $51,037, $58,461 and $41,516. A representative for Dollar Tree did not respond to a request for more information.

As you go further out from Louisville, Dollar General stores aren’t limited to areas with lower incomes. There’s a location in Simpsonville, where there was a median income of $62,708 in 2015. There’s also one in Crestwood, where the median income was $82,773.

But Dollar Generals are less prevalent in those more affluent suburban areas. Take a look at where they and their competitors are located in the area: